Buyers are turning to shared ownership to get a foothold on the property ladder as house prices boom as a result of the pandemic.
Despite house sales being put on hold in March, demand has surged since the property market opened again, pushing house prices up to a record £245,747 average in August, according to Halifax.
This combined with increased scrutiny and tighter criteria from lenders in the face of rising unemployment rates means that making that first step on the ladder is just a pipedream for many struggling individuals, couples and families.
Together Homes, part of housing provider Together Housing Group, is offering a lifeline to wannabe homeowners in the form of shared ownership. This allows those who wouldn’t otherwise be able to afford to buy on the open market, the chance to part-buy and part-rent.
The average deposit for a first-time buyer is £47,059 — up from £37,761 in a decade. Yorkshire Building Society found that savers trying to build up a 15% deposit, face waiting 10 years or more, based on typical monthly savings.
By comparison, lenders are more willing to accept a smaller deposit from those buying through shared ownership than the open market as they only need to put down a deposit on the percentage they are buying so there is less risk.
The typical shared ownership deposit is just 5% of the share you are purchasing. So if you are buying a 25% share of a home with a full value of £245,000, the value of your share will be £61,250. If a 5% deposit was required, you would need to put down a deposit of just over £3,000.
Claire McCourt, Sales Manager at Together Homes, said: “Savers not only need more cash due to soaring house prices, but loans for smaller deposits have almost disappeared as banks fear that many could lose their jobs if coronavirus causes a recession.
“It is practically impossible to accumulate a deposit unless you have a high income, save exceptionally hard or have another source of money such as generous parents, grandparents or a bequest.
“With shared ownership, you buy a percentage and pay rent on the rest. We own part of it — but you’re living there, you decorate it, and you decide when to sell. Buying a percentage means a smaller deposit and smaller mortgage. It’s a sooner first step on the ladder for lots of people and you can buy more shares as and when you can afford it.
“We’ve had a huge surge in interest during the pandemic as people living in cramped rented flats are desperate to get a house of their own with a garden or crave their own space after living with parents 24/7.
“We’ve noticed that buyers are more willing to sign up to a property without seeing it because they don’t want to miss out on their dream home. We’ve had more people buying off plan and more early bird reservations on homes that won't be ready for another 18 months.”
With construction sites and sales offices closed for several weeks - and little advance warning or time to prepare – Claire and her team had to quickly adapt to ensure customers and colleagues were kept safe and informed.
Throughout the pandemic, Claire’s team have not only helped people realise their dreams but also stepped in to prevent nightmares.
Claire said: “We had one guy who was effectively homeless due to a marriage breakdown and was sofa surfing before the lockdown. When social distancing came into effect, he was unable to continue sofa surfing as this would put himself, friends and family at risk. One of our sales consultants arranged an urgent viewing and within 24 hours he was handed the keys to his new flat, providing him with a roof over his head just as the nationwide lockdown went into effect.
“We had another customer who faced homelessness during lockdown when the landlord of the property she rented ordered her to vacate so he could move his family from abroad in. Although she hadn’t yet completed on the home she was buying, our sales consultant secured a temporary license to re-house her family into what would be their home post-lockdown.”
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Claire added: “At this time of uncertainty, we need to ensure we keep both our customers and our colleagues as safe as possible. We have therefore developed a process for conducting viewings which facilitates social distancing while also enabling you to fully experience your future home.
“If you think you have found your new home, please get in touch. Your sales consultant will offer you a virtual viewing online and by phone. They will talk you through the details of your potential new home, answer any questions you may have and guide you through the process of buying.
“Should you wish to proceed with a physical viewing and only if you are in a position to purchase, your sales consultant will arrange exclusive access with you and explain our social distancing procedures to keep you safe.”
For more information, ring 0300 330 5533 or email email@example.com